7 days into the trading year for 2015 and DNL (one of the most successful stocks in 2014) has broken down two support levels already. What’s interesting to look at is, as DNL broke the 2nd moving average, the volume (investors selling) was relatively higher than normal.
This is a follow on article to previous post about DNL that it has hit its excessive phase in the uptrend. We have to understand that stocks do not go up forever that there will be specfic areas where investors take profits.
Here are possible scenarios to the stock:
If DNL continues to drop further, the next possible landing spot for the stock will be at around 13.67 to 14.
If that breaksdown too, a support could be seen from 12.5 to as low as 11.6.
At present, what’s key is 15.41. If DNL manages to pullback up that level it has a chance to prevent the breakdown. However if it fails to, the conditions above might present itself.
Is DNL a good stock? Yes it is. However, we have to remember that no matter how good the stock is, over the short term it will always get hit by the pressures of supply and demand. As more people sell and at this scenario more people are trying to take profits the stock will and can go down.
Will it go up over time? Yes, support levels can protect it from falling. However if it continues to fall it will be its earnings over the long term that will protect the stock and allow it to bounce back up over time. The question is how long?
Movements like this are part of how the market works. My heart for writing this post is to give you a perspective on where the stock is and I hope it would give you the urge to reasearch and study more and more. I want you to grow in investing so that you and your family can benefit from stocks not just now but for years to come. God bless you!
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